HMRC boosted with £77m to fight multinationals' UK tax avoidance - but Downing Street says there will be no 'naming and shaming'

An emergency £77million will be funneled into HM Revenue & Customs (HMRC) to help combat the billions of pounds in lost tax haemorrhaging from the Treasury's coffers as multinationals and wealthy individuals sidestep their financial obligations, albeit legally.

The action comes as a cross-party parliamentary committee slammed companies such as Google, Starbucks and Amazon for their 'immoral' tax dodging which was 'an insult to British businesses and individuals who pay their fair share'.

Also at fault was HMRC itself, which it said was being ‘lacked determination' and was 'way too lenient’.

Ahead of his Autumn Statement on
Wednesday, Osborne said: 'The Government is clear that it is
unacceptable for a minority to avoid paying their fair share, sometimes
by breaking the law.

'We are determined to tackle this
problem and HMRC are making good progress, but we are giving them
additional tools to bring in more.

The action we are announcing today
will help HMRC close in not only on those who seek to avoid or evade
tax, but on the dubious ‘cowboy’ advisers who sell them the schemes and
dodges they use to cheat the law-abiding majority.'

HMRC's extra funds will help expand
its anti-avoidance and evasion activity, with the Government expecting
it to bring an additional £2billion per year in tax that would have
otherwise gone unpaid. Its ‘affluence unit’ will apparently recruit 100
extra investigators.

Margaret Hodge, who chaired the Public
Accounts Committee, said offenders - be it companies or individuals -
should be named and shamed and face prosecution.

FORGOT ABOUT DRE?

High earner: Rapper Dr. Dre, pictured accepting an award, was given a tour of Number 10, despite his company using a tax loophole

A US gangster rap star whose company uses a tax loophole enjoyed a private tour of No 10 arranged by George Osborne, it emerged yesterday.

The Chancellor, who has called aggressive tax avoidance schemes ‘morally repugnant’, arranged the tour for Dr Dre after meeting his business partner at a US event organised by the British consulate.

Dr Dre is the highest-paid musician in the world after earning almost £70million during the last tax year, much of it from his stake in headphones brand Beats by Dr Dre.

Beats has set up a network of subsidiaries and related firms, allowing it legally to reduce its corporation tax liability.

It has based its global headquarters in Ireland, where corporation tax is much lower than in Britain and the US.

Luke Wood, president of Beats who accompanied Dr Dre on his No 10 tour, is reported to have said in October: ‘There are obviously certain financial benefits to being in Dublin.’

But Prime Minister David Cameron ruled this out, Downing Street saying such a move could undermine taxpayer confidentiality.

The Committee's report said evidence
received from Starbucks, Google and Amazon last month regarding their
tax affairs was 'unconvincing, and in some cases evasive'.

And today Treasury minister Danny
Alexander admitted it was the threat of a huge boycott by customers that
forced the coffee giant Starbucks into paying tax in the UK.

The company, which has paid just
£8.6million in corporation tax in the UK over 14 years - and none in the
last three - is seeking to deflect a consumer boycott and increased
taxman scrutiny by voluntarily increasing the amount it pays.

Alexander said the change of heart on
the company's part was 'more of a reflection' of coffee drinkers
threatening to take their custom elsewhere.

Starbucks, which has more than 700
outlets in Britain, has now met with HMRC officials to discuss
increasing the amount of tax it pays.

Starbucks has been trading welll but it has posted a profit from its UK business only once in 15 years

Mr Alexander, the Chief Secretary to
the Treasury, said: 'The comments by Starbucks this morning where
they’ve said they want to come to the Treasury and HMRC to talk about
their affairs is perhaps more of a reflection of something quite new
which is the consumer pressure that has been put on those companies.

'They’ve reported that they’ve had lots of pressures from their customers and that’s a good thing.

'It’s good that the public exercises
its rights there but what we can do as a government is put more
resources at the disposal of HMRC to make sure they have the ability to
get under the skin of what it is that companies and rich individuals too
are doing in the tax system.'

Currently Starbucks pays a 'royalty
fee' to a sister company in Holland for the right to use the Starbucks
brand and recipe, allowing it to benefit from the country's tax regime.
This legal accounting tactic helped Starbucks sidestep an estimated £5m
corporation tax bill last year.

A spokeswoman said: 'Starbucks is
committed to the UK for the long term and we have invested more than
£200m in our UK business over the past 12 years. Starbucks has complied
with all the tax laws in this country but has regretfully not been as
profitable as we would have liked.

'We have listened to feedback from our
customers and employees, and understand that to maintain and further
build public trust we need to do more.

'As part of this we are looking at our
tax approach in the UK. The company has been in discussions with HMRC
for some time and is also in talks with The Treasury. We will release
more details later in the week.'

Ministers are alarmed that the scale
of corporate tax avoidance is fuelling public resentment at a time when
ordinary workers are being asked to pay more towards bringing down the
huge budget deficit.

The report says international firms
have ‘an unfair competitive advantage over British businesses which have
no choice but to pay their corporation tax’.

The Commons investigation was launched
after public anger was fuelled by revelations that Starbucks paid no UK
corporation tax in the last three years. The coffee giant yesterday
pledged to pay more tax, after a furious reaction from the public to the
revelations, including boycotts of its stores.

In 2011, Google avoided more than £200million in tax, only contributing £6million to HMRC despite revenues of £2.6billion.

The online search engine subsequently admitted to funnelling its profits over to Bermuda – a renowned tax haven.

Amazon was last week forced to reveal
to the committee that its UK operations recorded a pre-tax profit of
£74million last year but paid £1.8million to HMRC – an effective rate of
just 2.6 per cent.

The online retailer, which is
registered in Luxembourg and has a deal with the country’s government to
lower its tax bill, was also forced to admit it made £3.35billion in
sales in the same year.

Tax accountant Richard Murphy said
last night: ‘HMRC badly needs to be reformed. It is far too friendly
with big business because it is virtually being run by big business.’